Global installed energy storage capacity for grid and ancillary services is forecast to grow from an annual market of 1.1GW in 2016 to 21.6GW in 2025, according to Navigant's Energy Storage for the Grid & Ancillary Services report.
Six applications are identified in the report, which span short and long duration energy storage: peak pricing arbitrage, generation capacity, transmission and distribution (T&D) asset capacity, frequency regulation, volt/volt-ampere reaction (VAR) support and renewables ramping/smoothing.
Energy storage for generation capacity is expected to be the largest application throughout the forecast period, and the second fastest growing.
In 2016, Navigant estimates demand for energy storage for generation capacity to be 362MW. By 2025, annual demand for energy storage for generation capacity applications is expected to be in the region of 9.5GW.
Frequency regulation-type grid ancillary services are also driving demand for grid-scale energy storage today, accounting for the second largest application by share, in megawatts, Navigant said.
However, growth in demand for energy storage for frequency regulation is expected to plateau over the forecast period, accounting for about 2.9GW of demand in 2025.
In deregulated power markets, such as PJM Interconnection's in the US, rules have been established to compensate energy storage providers of frequency regulation services.
Providers of the service are paid more the better their assets perform. Fast responding energy storage has the highest rating, significantly improving grid efficiency overall, partly by enabling other resources to respond to other frequency imbalances more effectively.
Collectively all resources can therefore work more efficiently to balance supply and demand.
Over the next decade, demand for energy storage for renewables ramping/smoothing will see the fast rate of growth, according to Navigant's study.
Renewables ramping/smoothing typically requires energy storage systems to have a 0.5-2 hour duration.
This application is well suited to lithium ion batteries, which will likely dominate for such applications. These systems are often co-located directly at, or close to, renewable energy facilities.
Today mainly island grids are deploying energy storage for ramping/smoothing, such as Hawaii, where new solar capacity additions, whether small-scale rooftop photovoltaic systems to ground-mounted installations, require energy storage.
Energy shifting, such as wind power from night to day time requires 2-8 hours of storage duration. Current storage costs, combined with wind farms already contracted into guaranteed compensation programmes, such as feed-in tariff contracts as well as regulatory barriers mean that adoption of storage for wind firming is only likely to start to gain traction from 2019 onwards, in mature onshore wind markets such as Germany.
According to Navigant's report, lithium ion will continue to dominate as the main storage technology of choice.
But, once longer duration requirements beyond five hours are needed, other storage technologies begin to have more value.
To run for 20 years – the same as the lifetime of a typical renewable energy generator – lithium ion batteries will require maintenance to swap out degraded cells and racks, so the operational expenditure for lithium ion battery facilities is potentially more than for alternative chemistries, like flow batteries, which suffer comparatively little degradation from cycling.